Financial Data and Key Metrics Changes - Second quarter 2025 sales were $706 million, a decrease of 0.3% compared to 2024, primarily due to unfavorable volume and mix, including net customer price adjustments, partially offset by favorable foreign exchange [12] - Adjusted EBITDA for the quarter was $62.8 million, an increase of more than 23% compared to $50.9 million in the second quarter of last year, with margin expansion of 170 basis points despite lower sales and production volumes [13] - The company reported a small net loss of $1.4 million in the second quarter compared to a net loss of $76.2 million in 2024, with adjusted net income for 2025 being positive at $1 million or $0.06 per diluted share [13][14] - For the first half of 2025, sales dipped due to unfavorable foreign exchange and slightly lower volume mix, but gross profit margin increased by 200 basis points and adjusted EBITDA margin improved by 300 basis points compared to the same period last year [14][18] Business Line Data and Key Metrics Changes - The sealing business is expected to drive revenue growth of about 6% on average over the next five years, with significant expansion of EBITDA margins and return on capital increasing to approximately 20% by 2030 [25] - The fluid handling business anticipates top-line growth averaging approximately 8% annually over the next five years, with EBITDA margins expected to increase to around 16% and return on invested capital approaching 30% [26] Market Data and Key Metrics Changes - The company was awarded $77 million in net new business awards during 2025, reflecting strong relationships with customers and operational excellence [10] - The company has successfully reached agreements with customers to pass through or recover the majority of direct tariff impacts on its business, allowing for a focus on operational excellence [29] Company Strategy and Development Direction - The company has established four strategic imperatives to drive significant improvements across its business, focusing on operational excellence, cost optimization, and leveraging digital tools for efficiency [21][22] - Long-term strategies for each operating segment have been developed to achieve stated strategic imperatives and enhance value creation over the next several years [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive free cash flow for the full year, supported by solid results in the first half and expectations for production volumes [20] - The company is better positioned than ever to execute its strategic plans and deliver on its commitments, despite ongoing challenges in the industry [27][28] Other Important Information - The company ended the second quarter with a cash balance of approximately $122 million and total liquidity of approximately $273 million, which is deemed sufficient to support business plans and growth objectives [19] - The company is actively evaluating options to strengthen its balance sheet and improve cash flows, with a focus on refinancing its first and third lien notes [20] Q&A Session Summary Question: Clarification on incremental revenue from sealing - The incremental revenue includes $400 million, with $300 million being net new business and the remaining $100 million from modest increases in production or pricing [34][35] Question: Details on fluid business incremental revenue - The fluid business is expected to have $600 million in incremental revenue, with net new business included in the outlook [38][41] Question: Margin expansion and optimization in a tariff environment - The company has a detailed quote process for new business, tracking variable contribution margins and managing pricing closely to ensure real and achievable margins [43][44] Question: Cash restructuring and working capital use - Cash restructuring was less than $10 million, and the company expects working capital use to unwind completely in the second half of the year [62][64] Question: Potential rate reduction from refinancing - The company is optimistic about a potential improvement in rates when refinancing, with expectations of a reduction of 100 to 300 basis points [67][69]